Friday, November 21, 2008

The "Financial Fools" reign...

Yesterday was a big day in the life of "Chicken Little".

He finally told his wife about the sorry state of their finances and she made him sell all the mutual funds in his retirement account. The mutual funds in his retirement account are the ONLY investments that HAVE EVER produced a positive return for Chicken Little. By my count he has lost over 3/4 s of a million with his own investment selections.
Because I've been personally responsible for getting him to invest in and hold onto those mutual funds, I feel personally betrayed by his sell out. All he has in his retirement account now are the three investments that he purchased on the advice of friends, over my objections. The largest of which is a "Venture" deal that is worth nothing and the others are two stock positions that have fallen far more than the mutual funds he just sold. I know I shouldn't take the actions of a "Financial Fool" personally, but I do. I need to be more professional about what I do and not take this kind of irrational behavior to heart.

I believe that what we've seen is what the "technician" would call a triple bottom.
Historically, this is a very strong signal that the markets have found their low and while they may not begin to rally immediately, the "bottom" is in.
The 3 month T-Bill is yielding 1/10 of 1% interest. The result of the "flight to quality" and provides the investor with a return that GUARANTEES they will loose purchasing power over time. What this tells me is that the markets are on the cusp of a serious rally that Chicken Little will watch from the sidelines.

Good luck to Chicken Little and all the others out there who chase short term performance.

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